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Microsoft’s SMB Products and Services

As IT spending in the small-to-midsized business (SBM) market increases, Microsoft focuses its efforts on related software and services, such as Windows Essential Business Server (EBS), Small Business Server (SBS), and Microsoft Online Services (MOS).

IT spending in the worldwide small-to-midsized business
(SMB) segment will grow by 7 percent annually through
2011, according to IDC. Compare that specific segment’s figure
with IDC’s prediction of an annual growth rate of 5.2 percent
for overall IT spending worldwide in the same period,
and you can see why Microsoft is increasingly focused on
growing its revenue and market share in this fertile field. The company
is approaching this segment with both software, such as the
new Enterprise Business Server family (which includes Windows
Essential Business Server—EBS—and Small Business Server—SBS),
and hosted services such as Microsoft Online Services (MOS—for
details on MOS, see Paul Thurrott’s article on page 12). So how do
these offerings fit together for Microsoft, and what does it all mean
if you’re in IT in an SMB organization?

SMB and Microsoft Products
Microsoft Vice President of Worldwide SMB Mike Risse recently
explained that the SMB segment accounts for “straight up revenue of
$50 billion for Microsoft overall. This represents about 20 percent of
the company’s revenue. But it’s growing the fastest of the segments.
From a profitability perspective, SMB has all the big core products
in it—Windows Server, Office, Windows client. We’ve also got many
of the smaller products, and we’re growing the business rapidly in
areas such as security, management, PerformancePoint, Unified
Communications. We have grown the business 50 percent over the
last three years.”

The SMB pivot on Microsoft’s business is interesting. But the
company is also investing in products specifically targeted at SMBs,
such as EBS and SBS. And Microsoft is keeping SMB in the spotlight
as it introduces new offerings such as MOS.

How does Microsoft’s strategy for EBS and SBS dovetail with
its Software Plus Services (S+S) strategy and MOS hosted services?
Risse said EBS and SBS will form the foundation for businesses to
use S+S solutions: “SBS (which is good to 75 employees) and EBS
(which is good to 250) are the hub for service consumption and distribution.
Say you have 50 employees in your organization. Are all 50
employees going to bypass the IT network and infrastructure and go
straight to the cloud? No. They will all go through their AD structure
or file-management structure or network logon and then the Internet
access structure. Their access will be managed, appropriate, and so
forth. To do that you need a modern infrastructure for managing the
employees and what services they get to. SBS and EBS are that modern
plumbing infrastructure. As
an example, not only \[do SBS
and EBS\] have services built in
for security, but also the ability
to build an Office Live site locally
and propagate it.”

SMB and Microsoft
Partners
Because the majority of Microsoft’s SMB customers rely on partners,
and because partners are so important to Microsoft’s success, Risse
emphasized the role partners will play in the S+S world, with EBS in
particular: “It’s incredibly beneficial if this box, which services these
employees, can be remotely managed through a browser. We’re putting
this functionality into EBS so that a partner now has a services
relationship \[with EBS customers\].”

How many SMB customers will want this type of service arrangement?
Risse said, “The SMB market will want remote management
because IT is not their core competency as a business. This is the
90 percent case of a 100-person company: They’re going to have a
server. It will be the point of control for all IT resources and services
provided to the user community. That server, which could be onsite
or offsite, will be remotely managed by a partner. It will provide
both cloud-based services and services the partner may provide
uniquely. The combination of partner services, cloud services, and
local software will be the typical configuration.”

The IT Impact
If businesses rely increasingly on partners and hosted services, what
happens to IT jobs? In Risse’s opinion, the IT jobs simply move from
being inside a company to being on the outside. “This is IT, as well.
The only question is, ‘Who are they working for?’ This new approach
increases the importance of the IT person as it becomes part of that
trusted advisor relationship rather than an employee relationship.
Frankly, there’s generally more power in the trusted advisor relationship
as having a broader perspective and having the ability to not just
fix things but see what can be brought to the organization.”